Whirlpool Corp. (WHR) on Tuesday reported a quarterly profit that topped analysts’ estimates as demand for appliances in North America and Europe and a weak dollar boosted sales.
The maker of KitchenAid and Whirlpool appliances said 2004 earnings would top Wall Street forecasts. Still, its shares dipped 2 percent as some analysts cited disappointing profit margins.
Whirlpool, based in Benton Harbor, Michigan, reported a fourth-quarter profit of $125 million, or $1.76 a share, reversing a year-earlier loss of $29 million, or 42 cents a share. The 2002 loss included restructuring and other charges totaling $2.06 a share.
Analysts on average were expecting profit of $1.75 a share, according to Reuters Research, a unit of Reuters Group Plc.
“It was a pretty solid performance,” said Morgan Keegan analyst Laura Champine, who said Whirlpool would likely gain market share this year given its new products and growth in the home builder market. She rates Whirlpool “outperform” and owns no stock.
Longbow Research analyst David MacGregor, who also rates the company “outperform,” said Whirlpool improved operations in Europe and Latin America, and delivered on profit guidance that many analysts did not believe it would meet.
“I think the execution this quarter was probably pretty good,” MacGregor said.
But Nicole Parent of Banc of America Securities, who has a “sell” rating on Whirlpool, said in a research note that operating margin conversion was disappointing. “Given strength of appliance shipments in Q4, investors will be disappointed that the company didn’t beat by more,” Parent said.
Whirlpool, which is shifting output to lower-cost areas, cited productivity gains in North America and Europe, and said it expected industry shipments to rise this year in all major regions. Results in 2004 will be helped by higher-end products such as the Duet washer and dryer, it said.
“We are seeing increasing signs that consumers are both trading up and accelerating appliance replacement,” Whirlpool President Jeff Fettig said during a conference call.
Both Whirlpool and Maytag Corp. (MYG) are benefiting from rising appliance demand. But Maytag is being hurt by slumping profits at its Hoover vacuum unit as consumers migrate to lower-priced models.
Whirlpool’s total fourth-quarter sales rose 14 percent to $3.36 billion. Excluding currency translations, sales increased about 7 percent.
Sales in the key North American market rose 7.6 percent, while operating profit improved 9 percent despite a marked rise in U.S. pension costs, the company said.
European sales were up 27 percent from a year earlier, rising 9 percent excluding currency translations. Latin America sales were up nearly 28 percent but operating profit declined because of higher costs for materials and a stronger Brazilian currency. Sales in Asia rose 6.5 percent, boosted by currency.
For 2004, Whirlpool said it expects earnings of $6.20 to $6.35 a share. Analysts on average expect $6.18 a share, according to Reuters Research.
In New York Stock Exchange trading, Whirlpool shares fell $1.59 to $73.31, while Maytag stock eased 25 cents to $27.61
From MSN Money
